Thursday, October 16, 2008

Rudd's Billions

Well, Kevin Rudd did well to initially state that the Federal Government would underwrite any losses suffered in the event of an Australian bank collapsing as a result of the world's financial crisis. Good point for him, thats what a Government is to do when times of hardship happen.

But I totally disagree with the soon announcement that the Federal Government will give one off payments of $2100 to pensioners, $1000 to babies born after 14 October and lump sum payments (the amount escapes me) for low income earners and an increase from the first home buyers grant to $14,000 (up from the existing $7,000) and an astonishing grant of $21,000 to first home "builders" as long as the house is constructed before 30 June 2009.

This totals a massive $10.4 BILLION dollars in hand outs.

And why? Because the "average" Australian is struggling during the current financial crisis....

What a load of rubbish! The reason why the crisis happened in the first place was that people were living on credit and buying homes on 100%+ mortgages and then defaulting on those mortgages causing a glut of 'bad debt' in the market place. It is because of the chronic ability for people to buy things within their means...

And now Rudd is giving people a lump sum which will primarily be used on luxury items and paying off debt so people can use more credit. In addition, do you not think that every house just went up in value by an additional $7,000 and hence mortgages will be that fractionally more expensive?

Why not simply reduce fuel excise so that the average Australian will save $1000 a year on petrol? The surplus remains, the government takes a cut on their income but Australians will have a bit more disposable income to ensure that the economy remains proportionally prosperous.

Instead, Rudd has blown the surplus - which should be used for capital expenditure on infrastructure - on your average Australian gaining a plasma TV.



Deliberately_Anon said...

Yep. This is a typically Labor response to a problem. Spend your way out of the hole, even if that is not the best way to go forward. All I can say is that Australian's deserve this since they voted the K.Rudd into office in the first place.

Be careful what you ask for...

Clay said...


Is that you Malcolm Turnbull?

Annachie said...

I can see the theory.

Luxury good stores (Plasma TV's and such) are basically empty. if things went on then many would go under causing a large bump in unemployment etc.
Giving money to people who otherwise would not be able to afford such means that TV sales 9etc) will continue and those shops wont fail (Hopefully)

Giving money to the better off runs the risk of them investing it in the share market or property or similar and not stimulating the economy.

It's the same theory with the housing market. Sales and new houses are slowing, so hopefully the bonus will stimulate it. I would also suspect that the big home builders have had things explained to them quietly, and firmly, and that the new house prices wont shift much. It's what I would do. lol

Of course any method of distributing money like this will throw up odd cases*, but in targetting pensioners they are trying to help the worst off sectior (In general) and the baby/child bonus is the most likely to be spent in the stores.

Hopefully the government will increase the spending on infrastructure, but that sort of spending has a much slower input into the economy. After all we wont see much trickle down into the hands of the real workers until all the planning and studies are done. Several years I believe.

And before people get too into the bloody Labor stuff, this idea of directed bribes started with Howard's Liberal government as a way of stimulating the economy.

*Somewhere in the vacinity of $9k. That is rediculous but so useful. Come to think of it, not a luxury good on the todo list either.